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Dan Loeb Targets Bath & Body Works. Activists Haven’t Had a Good Year in Retail.

Daniel Loeb, founder and chief executive officer of Third Point.

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Jeenah Moon/Bloomberg

Bath & Body Works
stock is heading higher early Friday, on news an activist shareholder is pushing for changes. But if the past year in retail is any indication, investors shouldn’t get too excited.

After the close of regular trading Thursday, Third Point, helmed by Daniel Loeb, said it now owns just over a 6% stake in Bath & Body Works (ticker: BBWI). That equates to 13.75 million shares, building on a position the firm had initiated in the third quarter, a nearly $525 million bet.

Third Point is already pushing for changes, according to the filing with the Securities and Exchange Commission. The firm claims that Bath & Body Works’ board has “made errors in structuring its executive compensation such that excessive awards have been made that are untethered to important performance metrics,” and questioned other capital allocation decisions.

While not explicitly saying it would seek a proxy fight to replace board members with its own candidates, Third Point did note that it believes Bath & Body Works’ issues are fixable through various actions, including board “refreshment.”

A spokeswoman for Bath & Body Works said Friday, “We value the view of our shareholders, and we will continue to make decisions and take actions that we believe are in the best interests of the company and our shareholders.”

The shares spiked 5.3% in early trading to $44.40 on the news. Yet if history is any guide, activists haven’t had much success in the retail sector in 2022.

Although they have certainly tried. As Barron’s noted in the spring, the retail sector looked primed for activist investors this year: The rising tide of pandemic spending that lifted all boats receded, allowing problems at some weaker players to be exposed just as falling stock prices agitated shareholders.  

Indeed, there was a flurry of activist activity beginning in 2021, most notably at
Bed Bath & Beyond
(BBBY), and
Dollar Tree
(DLTR), which came to a head this year.

Dollar Tree is as close as it comes to an activist success story: The discounter expanded its board of directors to include a slate of candidates put forth by activist Mantle Ridge, including a former chief executive of rival 
Dollar General
 (DG), Richard Dreiling, among other initiatives. The stock is up about 2.4% year to date, as shares of other retailers—as tracked by the SPDR S&P Retail ETF (XRT)—are off 28.5%, and the
S&P 500
has lost 17%.

Yet that performance still trails larger rival Dollar General—whose shares have risen more than 5% this year—and Dollar Tree’s most recent results shows it still has plenty of catching up to do. Moreover, its November quarter was the second time it had to lower its full-year outlook.

Kohl’s and Bed Bath & Beyond fared much worse.

Back in March, Kohl’s was fielding offers from nearly two dozen suitors who placed its value around $60 a share, a $9 billion deal that Barron’s said the company would be smart to take.

Spoiler alert: It didn’t, and now has a market value of just over $3 billion, a junk rating on its credit from S&P Global Ratings, and a much diminished earnings outlook after it pulled its fourth-quarter guidance. Its CEO stepped down—one of the many to leave amid poor stock performance. With shares off more than 45% so far this year, it’s no surprise activists are still agitating for more change.

Incredibly, Bed Bath & Beyond’s story is even more painful. The stock has plunged more than 77% this year, despite its brief stint as a meme stock. In June, the company ousted its CEO, activist Ryan Cohen sold his entire stake in August, and Bed Bath’s CFO died tragically in September. The company has continued to face new questions about its liquidity as its cash shrinks.

Of course, Bath & Body Works is in much better shape, and there is no indication it will flail in such a spectacular manner, or even at all. Perhaps the shares’ 40% year-to-date loss will be its low water mark, particularly if the company can turn out a strong holiday showing.

Still, for investors considering chasing the stock’s pop, it’s worth remembering that activists haven’t exactly had the Midas touch in retail recently.    

Write to Teresa Rivas at


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